Investing.com -- Oil prices fell in Asian trade on Monday as markets awaited more interest rate cuts from China, while U.S. monetary policy remained in focus before an upcoming testimony from Federal Reserve Chair Jerome Powell this week.
Crude markets saw a dose of profit taking after logging strong gains last week, as signs of strong refinery demand in China helped offset somewhat hawkish signals from the Fed and weak economic indicators from around the globe.
Brent oil futures fell 1.5% to $75.48 a barrel, while West Texas Intermediate crude futures fell 1.4% to $70.94 a barrel by 22:34 ET (02:34 GMT). Both contracts rose more than 2% each last week.
China growth concerns in play ahead of loan prime rate cut
While refineries in China processed their highest amount of crude in years through May, concerns still persisted over a slowing economic rebound in the country, which could keep fuel consumption limited and bring down overall crude demand.
Goldman Sachs (NYSE:GS) became the latest major investment bank to trim its annual growth forecast for China, stating that current levels of stimulus in the world’s largest oil importer will be insufficient in supporting an economic recovery.
The cut follows a string of weak economic indicators from the country for April and May, and pointed to a slowing rebound despite the lifting of anti-COVID measures.
China is now expected to cut its key loan prime rate on Tuesday after trimming short and medium-term rates last week, as Beijing struggles to support economic growth. The rate cuts had provided some support to oil prices.
But oil markets were also disheartened by little progress in talks between top U.S. and Chinese officials over potentially cooling tensions between the world’s largest economies.
U.S. Secretary of State Antony Blinken met Chinese Foreign Minister Qin Gang over the weekend, the first meeting of senior U.S.-Chinese officials in five years. But both parties flagged little progress in mending frayed relations, amid disagreements over Taiwan.
Fed remains in focus ahead of Powell testimony
Fed Chair Jerome Powell is set to testify before Congress on Wednesday, with markets watching for any more cues on U.S. monetary policy.
The Fed held rates steady last week, but forecast two more potential rate hikes this year as it continues to move against inflation. The move had rattled oil markets with the prospect of more economic and demand headwinds from high U.S. interest rates.
A slew of Fed officials are also set to speak this week, offering more cues on monetary policy.